In review: licensing and taxation of gambling activities in France

All questions

The licensing process

i Application and renewalLand-based gambling operators

As the FDJ owns exclusive rights on the organisation of lotteries and land-based sports betting and the PMU owns exclusive rights on the organisation of land-based horse betting, there is actually no licensing process to describe in this Section.

Licences can, however, be obtained to open casinos in specific locations, as previously discussed. Even though a legal entity or an individual can operate several casinos in different places, each casino must be the object of a single application process and the licence potentially granted will only apply to such establishment.

Before a casino can begin operating, the applicant that wishes to become an operator must reach an agreement with the host city and obtain a formal authorisation from the Ministry of Home Affairs, which will remain subject to diverse forms of control by different public authorities and is of a temporary nature. Indeed, the law provides that the duration of the agreement between the casino operator and the city cannot exceed 20 years and that the licences are themselves temporary.

Online gambling operators

Companies willing to obtain a licence must submit a separate application for each gambling category in which they want to operate (gambling ring deck card games, horse-race betting or sports betting), but a single company can submit three distinct applications and attempt to obtain the three types of licence from the ANJ. The decision to issue or refuse a licence is taken by a specific ANJ committee, which can grant operators a non-assignable renewable five-year licence.¹⁷

The ANJ issues licences only to operators that have the technical, economic and financial capacity required to comply with their obligations, both in terms of gambling service and in terms of public order protection, anti-money laundering, public security, and the fights against terrorist financing and compulsive gambling.

In the application form, the operator must, in particular, provide a description of its economic, financial and accounting state and information concerning:

1. its gambling website;
2. the gambling services it intends to operate;
3. the accounts of the players;
4. the actions it intends to take against compulsive gambling and against fraudulent and criminal activities;
5. how it will proceed to avoid any conflict of interest; and
6. its IT architecture.

The ANJ must respond within four months and may request any additional information and documents from operators while reviewing the application. If the ANJ does not provide an answer within four months, the application will be deemed rejected.¹⁸

Licence fees vary depending on the number of applications (€5,000 for a single application, €8,000 for two applications and €10,000 for three applications). In addition to this initial application fee, operators must also pay an annual fee of €20,000 for a single licence, €30,000 for two licences and €40,000 for three licences.

ii Sanctions for non-complianceIllegal online gambling offer

Operating online gambling services targeting French users without a licence can be punished by a fine of up to €90,000 and imprisonment of up to three years. Such sanctions can be increased to €200,000 and seven years where the illegal online gambling offer is made by an organised group.¹⁹

Even though foreign-based operators targeting French users could in theory be punished by such sanctions, it is customary that any prosecution is preceded by the ANJ's chair sending a prior formal notice to inform the foreign site of its obligations under French law and requiring that it ceases the activity. The addressee shall submit its observations within five days. Such requests are generally followed by the foreign-based operators, and proceedings very rarely go beyond than this first step.

However, when this period has expired, the ANJ can use its new means of action granted by the Law of 2 March 2022 aiming at democratising sport in France.²⁰ Since March 2022, the ANJ judicial procedure for blocking illegal gambling sites has been replaced by an administrative blocking procedure to fight against illegal gambling sites. The president of the ANJ may now, under the supervision of an administrative judge, order an ISP to block access to sites that offer illegal gambling and sites that advertise unauthorised activities or order that any person operating a search engine to stop referencing these sites.²¹

In addition, the Minister of the Budget can, upon a proposal from the ANJ, block any movement or transfer of funds from online gambling operators operating without a licence for a renewable period of six months.²²

Sanctions applicable to licensed online gambling operators

Licensed online gambling operators can also be punished for failing to comply with their obligations under the Online Gambling Law, which may result in: (1) a warning from the ANJ; (2) a reduction of the duration of their licence (up to one year); (3) a suspension of their licence (up to three months); or (4) a withdrawal of their licence, accompanied by a prohibition from applying for a new licence for up to three years.²³

The ANJ may also impose administrative fines, whose amount may vary with the seriousness of the breach, the status of the online gambling operator, the damaged caused by the breach and the benefit derived from this breach. In any event, such sanction cannot exceed 5 per cent of the online gambling operator's turnover in the previous financial year (increased to 10 per cent for repeated breaches). Should a breach occur during the first year of business of an online gambling operator, the sanction shall be capped at €150,000 (or €375,000 for repeated breaches).

Since 1 January 2020, the ANJ has also been able to sanction operators holding exclusive rights (PMU and FDJ) – namely by issuing warnings, suspending the operation of specific games, withdrawal of a director's licence and issuing financial penalties that may not exceed 5 per cent of their turnover.

Taxation

i Taxation imposed on gambling operators

Diverse forms of taxation and social contributions are imposed on the lottery tickets sold by the FDJ, for a total representing about 25 per cent of their costs.

Casinos are subject to progressive taxation, which varies depending on the total amount of their gross gambling revenue. Gaming clubs are subject to a similar form of taxation. A player's casino gains in excess of €1,500 are subject to 12 per cent taxation, which shall be directly collected by the casino.

Since the vote of the PACTE Act, in 2019, sports betting operators and lottery operators (whether land-based or online) are subject to taxation based on the actual turnover resulting from the difference between the bets made by players and the players' gains as well as a social security contribution; whereas horse-betting operators' and online poker operators' taxation is still based on the total amount of wagers. In addition, a specific tax applies on the commissions earned by French companies on amounts bet on French horse-racing events from abroad.

In addition to the various taxes imposed on the national and local level, each sport betting operator must execute an agreement with the relevant sports federation for the purpose of specifying the cost of the 'betting right' to be paid by the operator to the federation.

ii Taxation imposed on gamblers

As a general principle under French fiscal law, gambling gains are not subject to income tax.³⁰ The interest generated by such gains, however, is subject to such taxation, and winners of important gains could be subject to the French wealth tax, but the law has recently been modified to apply only to real-estate wealth.

Gains earned by professional players that appear to depend more on skill and strategy than on mere chance (notably with the game of poker) shall be filed with the tax authorities as non-commercial profits and are subject to French income tax. For the purpose of the enforcement of such law, any person who earns substantial and regular amounts by playing games, so that such activity could be regarded as professional, shall be considered a professional player.